Though there are many ways to become debt free, real estate investment is probably the most commonly used investment vehicle to create wealth. If you look at many mega wealthy investors, real estate is either how they built, or how they consolidated their fortunes. Either way â real estate has been proven to be a good investment in the long run â as long as your structure the investment strategy well and can afford the costs associated with it.
Real estate investment can be a very profitable vehicle for building your finances, provided you do it right â and the best way to make sure that this happens is to purchase properties that are positively geared. This way your investment property pays for itself â thanks to the rental income received. This eases the stress on your personal finances as well, as no additional funds are coming out of your pocket. Nice right? Yes, provided you manage your risk and leave a bit of room for unforeseen expenses every now and again.
There's been a bit of bad press about real estate investment as a way of becoming debt free lately, due to the global financial crisis and the amount of foreclosures, especially in the United States. But me, I look at the drop in prices and the amount of real estate on the market as a true opportunity for investment, a good time to buy your investment properties at good prices. Traditionally, the market is nervous when prices drop to such a degree, but to those investors with an ability to see potential, there is great opportunity all around.
When people talk about how to become debt free, they often refer to real estate investment, due to the simple fact that this investment sector has a capacity for good growth, bring income to the investor, and relative stability over the long term. These factors make real estate a great investment for those who are less risk tolerant, and as I mentioned before, the low prices at the moment are a great opportunity to pounce on great deals, and acquire a whole portfolio at prices which in the past would have bought you one or two properties.
For example I recently saw a television program about an Australian woman who sold her two houses in Brisbane, Queensland and travelled to Florida where she bought 9 properties at great prices. As a result, instead of 2 properties she owns 9 properties which all provide her with a good income, as they are positively geared. Great opportunities exist for those who have their eyes open and are willing to take the opportunities that abound. Becoming debt free does not happen by accident, it happens by careful planning. Enjoy!